DOT Finance

Tolling is No Solution for Our Transportation Funding Dilemma

On the transportation front, Congress has made a fool of itself in the last few weeks, with quarrels between the House and Senate making it difficult to interpret who’s in charge and little headway made thus far in solving the weighty question of how to replenish the Highway Trust Fund. The Fund is running on empty since it relies on revenue from the national fuel tax, whose receipts have been declining precipitously of late.

As a result, transportation experts and politicians have been fighting about the best way to find new funds, raising the possibility of increasing the gas tax, implementing a vehicle miles traveled tax, and, more recently, taxing oil speculators. Throughout the process, people have also been throwing around the idea that more widespread highway tolling could play an important role in filling the gap. Today, Ryan Avent suggested as much:

“Tolling highways would eliminate congestion. It would eliminate the perceived need to spend billions on general revenues on new highway capacity. And it would raise billions which could be used to keep highways in a good state of repair and provide effective public transportation for those unable or unwilling to pay for access to tolled highways. It would save gobs of money, time, lives, and emissions. We have a few excellent examples of these principles in action, but the prospects for wide-scale adoption of congestion tolling seems bleak. This is as straightforward a win-win-win-win public policy as one is likely to find. Shame about our political instutions being so awful and all.”

Ryan Avent’s right: there’s one good way to reduce congestion, and that’s by tolling roads. People will drive less if they have to pay to do so. In major cities like New York or London, tolls to drive into the center makes a lot of sense. Virtually everyone has the ability to use public transportation to get to Midtown or to the City from everywhere in the respective surrounding region. And the benefits — notably, faster bus transit services and a reliable income source for public transportation in general — are advantageous to people across the economic spectrum.

But outside of well-served, dense downtowns, tolling roads is no “win-win-win-win” policy. Rather, because America has such a car-dependent society, too much of the population needs an automobile to get around, and can’t afford to pay much more to drive it around, especially considering gas costs will inevitably increase.

Considering that Ryan Avent and I share almost the same “hometown” (him: Raleigh, me: Durham), I find it hard to believe that he would advocate wide-scale tolling. To implement measures today that would require people to pay to drive on most roads in the North Carolina Triangle would be a significant affront to the poor and much of the middle class, who are currently provided with embarrassing transit options that don’t get most people where they need to go in any reasonable amount of time. A regional rail system in the area, which has been in planning for decades, has yet to find a funding source. Most of America’s metropolitan areas have similarly dismal alternative transportation options.

A huge percentage of the U.S. population pays far too much for transportation; to put it simply, most working adults have no choice other than to own a vehicle and often to drive it dozens of miles every day. Making driving more expensive is a great way to devastate the already impoverished.

It’s true, tolling highways would save “money, time, lives, and emissions.” But it would also sacrifice the mobility of a large segment of America, because the reduced congestion would be a result of the poor and the middle class choosing not to drive because of expense, not because of choices made by the wealthy.

I’ll say it before, and I’ll say it again: the fairest, most logical way to fund transportation investments is through the general fund, paid for through an expansion in the progressive income tax. We all benefit, so we all should pay.

Many of us fight for better public transportation because we see it as a tool to reduce inequality; it expands mobility for people across class lines and it orients growth around neighborhoods that are more accessible to everyone, including those who choose — or have no choice — not to drive. Before we can start charging people to drive in semi-urban areas like the Triangle, we have a responsibility to dramatically improve transit and land use patterns. The latter must come before the former.

22 replies on “Tolling is No Solution for Our Transportation Funding Dilemma”

I wholeheartedly disagree with this blog entry, because not only has general fund revenue failed us in the past, but sources that come from these types of funds through income tax is less desirable to taxpayers than a toll implementation is. Lower middle class and low class drivers in my area not only ride the bus and trains, but are also starting to demand more transit options. Even if this proved to be untrue, Americans need to seriously reconsider their mobility habits, and tolling them will put them in a situation to start making serious sacrifices, in order to conquer a lot of issues we all face today (environment, economy, and transportation). We need to stop sending the message to drivers that it’s acceptable to drive everywhere without cost. If they can afford expensive maintenance, high insurance rates, and high priced gas to put in their cars, then being tolled is just another reason for them to relinquish their vehicles. This will ease in demand for transit. It’s not an issue of what’s fair or not.

The Triangle is quickly becoming another Northern Jersey thanks to the “no choice but to drive” mindset that doesn’t know anything but road widening and toll free motoring. Grade separated, limited access roads should be used for long distance travel only, and they should be tolled enough to make it so. It’s a serious problem when “interstates” become part of a daily commute or a trip to the soccer field, as has happened between these three hollowed out NC cities. It’s the difference between car dependency and car desperation. The sooner Americans start to back out of this dead end, through highway removal in some places and highway tolling in others, the better things will be for people whose cities and towns are sliced up and blighted by giant, traffic choked roads—especially the less-well-off! That’s true in itself, but using the toll revenues to make transit options available to people of all income levels is a slam dunk.

Start charging more and everyone will stop using public transport. I mean it’s already not that much cheaper than driving if they make it even more expensive suddenly everyone will start driving because it’d be cheaper and more comfortable.

Go Yonah! I agree with your proposal. Just because people are driving doesn’t make them rich. I would support some kind of congestion pricing in city centers because it reduces congestion and air pollution by reducing the number of vehicles there. On intercity routes, however, the pollution isn’t such a big issue and neither is the congestion.

Yonah I agree with your proposal. We’re in a bit of a pickle in my view. We would like for everybody to drive less and use more public transit, that being said there’s not enough satisfactory public transport services across board to encourage this and challenge the car culture. With a congestion charge on city centre driving (which would provide extra funding fro public transit) that could encourage people to park and ride which in turn will save them money on the overall commute. They would then need a train, tram or bus that would get them to where they want to be in a timely fashion. Very few cities here in the US provide services that provide the alternative.

I am another who believes that tolling is the correct way to go.

Force a change in habits. Too many in this country cry we can’t change because they don’t like change. Not that we can’t change.

Make driving harder, and people will take the options. Or better yet, they’ll move. They’ll change jobs.

Look at Phoenix and the amount of businesses already moving downtown because of the light rail. Change people’s habits and choices, and society will fall in line.

And for the record, I am not rich. I live in a paycheck to paycheck household where we only can afford one car. So I’ve already moved to be closer to a job so I can walk it. Rent went up, but not so much that it was worth having another car.

I agree with Chris + Nathan_H. In addition, there is an land use implication as well. When people stop driving as far land development will change and for the better.

I essentially chalk up this blog post to be saying something like: don’t increase cigarette taxes – most of smokers are poor and middle class and they can’t afford more taxes. No shit, and that is the entire point. Driving has been coined the new smoking (probably a generation away from maturity) and in order to get people to stop driving absolutely everywhere and demand changes in their communities like better planning and transit they need to see how much it hurts their wallet to really drive absolutely everywhere.

I think – in a crude understanding of economics – that our roadways are one of the biggest market failures of our capitalist system. They have engendered a near monopoly on mode choice through the effects autos have on land use and pro-auto policy (monopolies tend to try and protect themselves). This of course has externalized all sorts of costs in terms of congestion, pollution etc that barely anyone pays for. The congestion part is paid for, but in time and people have a difficult time individually quantifying time lost (it seems to me you take what you make per hour and multiply it by how much you sit and traffic and watch your money vanish – or your time with kids – or enter whatever precious time sentimentality argument: here). Lastly, it is socially unjust because there is a large enough segment of the population left out of the auto mode monopoly – the poor and disabled who can’t drive. And because it is a monopoly the other mode choices leave them nearly as stranded, or with a bad quality of life. Don’t forget of course that this segment of the population is going to balloon soon as the boomers lose their ability to drive.

So next in my rant (gotta kick the habit of getting too Palinesque in my comments – rambling…), as I understand in economics the government steps in to fix market failures. By forcing externalities to be captured in the price of driving (tolling, lets say) this will raise the cost and allow other mode choices to fairly compete. But we all know in order for transit to work we need density. That is where we need to see some planning and land use changes. That will only come when the government puts pressure on the market to change behavior. Expensive commutes and errands to mega malls/big boxes via toll payments will effect change in the land-use arena.

So I had been on the fence about Mr. Freemark’s long running suggestion that we simply pay for transport improvement out of the general fund and now I know I can safely say I disagree. I think by paying for a transportation infrastructure out of the general fund without user fees will keep the status quo. Sure the transit funding formula situation might be fixed but what about the market pressure on the land use side of it? Without an large in your face economic cost commuters and or developers will keep going on as they are. And worse yet in the progressive income taxation method suggested, regular folks really won’t feel a pinch because it’ll only be the rich that foot the bill (I want the rich to pay for other things like health care and education).

So to make transit a viable alternative in this new scenario where the transport is paid from the general fund, we would need a mechanism to effect land use decisions. That would mean more Portland like growth boundaries and very strict land use regulations. That of course would be amazing, but how many newer growth urban areas have been as successful as Portland? Um, none. Maybe Minneapolis if we are super generous and only because they are trying to be bike-tastic too. I consider the older and denser communities in the Northeast in another category – but they could stop sprawling too of course. There is no political appetite for such regulations or a simply policy wonky wherewithal to administer such regulations.

So the irony here is that I as uber-liberal I find myself advocating for the market to correct the imbalance with the help of the government in its role to fix market failures. We all understand transport infrastructure leads the way for land-use decisions. Street cars spread from the downtown and we saw our first suburbs, highways spread from downtowns and we saw our first exurbs, etc. But now we have lots and lots of highways – 48,000 miles of them in fact, not counting state-highways that act like interstates that will continue to allow for land development that is not conducive to transit at all. We need to take action on constricting the demand for those highways (if not start to take them away) so that land use changes will come via the marketplace. The control of cost of use of transportation infrastructure is key – if it costs a lot good land use will follow. From there transit will be a viable mode choice as we can see in our old growth cities.

If we don’t do this by more gas taxes or tolls then the inevitable oil supply constriction will do it to us way down the road. We can start getting prepared or we can wait for chaos. What I think I know to be the wrong approach is to simply write a check out of the general fund for the infrastructure cost and just hope someone else picks up the slack on the land use side of things so that transit won’t fail. We don’t have the political appetite to directly control land use (especially from the federal level), but we do have an opportunity in our mini-crisis of the highway trust fund perpetual deficit, in that we can gain political traction to increase user fees to get a change in behavior in the marketplace.

Thanks for listening.

I missed something in the post – but I still agree with me and disgree with Yonah. I think the cost and pain comes first and the land use and transit come second. This would seem to be incongruent with my whole bit on transport infrastructure leads land use, which is what Yonah’s last paragraph seems to be saying. However, I think that by Yonah’s method we would see transit as the Apple computer to the Microsoft/PC (which is the roads and autos). Without some pain in terms of cost to use roadways we would see transit development occur as sort of a niche in the transportation marketplace, hence Apple to PC. Sure Minneapolis is clamoring for a second street car line, but that doesn’t mean many other communities are struggling to get streetcars on the drawing board because. Building streetcars and transit like we did in the last 19th century will not produce results like they did back then.

I disagree with this article. Just because you’re poor doesn’t give you the right to pollute. Furthermore, any type of congestion pricing also advocates improved public transportation, both because it has a funding source and a congestion free roadway to operate on. In that sense congestion pricing is progressive.

There are other ways to make congestion pricing an increasingly progressive tax as well. For example, if the revenues are sufficient they could fund capital improvements for transit LRV, subway, and commuter rail lines. The funds raised could also go towards affordable, mixed use, TOD developments.

This article only promotes the status quo. That’s a shame.

I’m suspicious of almost all statements of the form “x and y are interdependent, but x must come before y.” The only way we make progress on any kind of interdependent multi-dimensional problem is to work on both x and y at the same time, and generate feedback that strengthens both.

Yonah, tolls and congestion pricing are two different things. Congestion pricing, for example the bridge tolls of New York and San Francisco, is appropriate in urban areas, on jammed roads. Tolls elsewhere are meant to defray construction and maintenance costs for roads, and discourage externalities coming from traffic that aren’t related to pollution. In the latter case, it doesn’t matter how many alternatives there are (what transit alternative is there to driving on A8 from north of Nice to north of Marseille, where the TER doesn’t go?). Someone has to pay the cost, and it had better be based on use.

Gotta disagree with your conclusion, Yonah. Amend it to read: “the fairest, most logical way to fund TRANSIT investments is through the general fund, paid for through an expansion in the progressive income tax,” and then you’re a lot closer to the truth. But without some demand management or scarcity allocation method, roads will always become disastrously congested, to the detriment of rich and poor (and the environment) alike. Until someone comes up with an effective mechanism other than tolling to allocate scarce roadway capacity, it’s premature to take tolling of the table. Improved transit is no silver bullet either; a large share of the nation’s heavily congested highway miles are in low density suburban areas in which it is extraordinarily difficult and costly to introduce a transit alternative that will attract travelers out of their cars.

Economically, all roads should be toll roads because the people that use them should be the ones paying for them. However, the logistics of enforcing tolls is not practical. (Toll-booths sometimes cause massive congestion.) So the toll should take the form of a tax or a usage-fee on automobiles themselves.

I agree with the idea that transit options have to come first, or at least concurrently with an increased gas tax or tolls. Instituting tolls would discourage people from driving and encourage people to turn towards . . . oh wait, there’s nothing to turn towards. When gas prices hit their peak in 2008, people flocked to transit systems, but only in areas already equipped with options. I live in the southeast, where transit just isn’t available in really any city, or between cities. People just had to bear $4/gallon gas and hope it went back down.

I think ramping up the gas tax over a span of years to decades, while at the same time pumping money into transit is the best option. Transit has been shown to be an effective driver of land use change, creating denser communities. I just don’t see increased tolls or higher gas prices having the same effect by themselves. Areas served by transit are attractive because mobility and interconnectedness are assured. That is what spurs development. Higher gas prices or tolls make the suburbs more expensive, and some may move to the city, but it seems to me the overall impact and rate of change would be much reduced. A combination of the two seems the best course.

Road-pricing is a red herring to put you off the scent of improving public transit, which would be best achieved by removing the fare. When the fares are gone, we will benefit from public investment. Yes, there are problems with fare-free transit, but compared to oil wars and global warming, they are minor.

Gas prices rose last summer much faster and higher than any proposed gas tax. The current (temporary, I think) depression in the price of oil/gas is a perfect time to introduce a better (i.e., larger, and indexed) fuel tax.

Every time I try to carpool outside of the city with a car owner, they insist on avoiding the toll road (in this case the highway which could save us an hour). So they drive on local roads, which puts more wear and tear on streets whose cities have less money to repair them.

As others have mentioned, every road should be a toll road. That’s the point of the gas tax. Hence the solution is to increase the gas tax to a level that would actually cover the costs of road repair (rather than forcing us pedestrians to pay for it unfairly through sales/income/property taxes).

But good transit services have to be available before we start telling people that they have to pay if they insist on driving on our roads.

Tolls even at some thing 25 cents a mile on expressways would help put real costs into peoples minds about their hyper mobility.

Jeremy, road wear is quartic in axle load, which means that a 30-ton 18-wheeler, with an axle load 12 times that of a 1-ton sedan, causes 20,000 times as much road wear. Trucks are never going to pay 20,000 times as much as cars in gas taxes (nor in tolls, but that’s another issue).

In countries other than the US, the primary purpose of the gas tax is to discourage people from driving because of the pollution and oil use it causes (e.g. Greg Mankiw estimates $2.21/gallon in the US just to balance pollution, excluding greenhouse gas emissions). Those multi-euro gas taxes help pad the general fund – in Germany, gas taxes are the second largest source of government income, after income taxes. They don’t levy those taxes to build roads any more than the US levies a cigarette tax to help advertise tobacco.

Here’s an interesting followup… if tolling the roads is so bad, because it’s regressive–then what about collecting fares on transit? Why not fund transit exclusively from tax revenues (and non-rider sources like onboard advertising), and let people ride for free? (Or for a nominal charge–say, a quarter–if necessary to prevent abusive consumption of the system?)

It isn’t likely to happen, of course. One of the quandaries facing transit advocates is that the public at large widely views roads as a public good (and supports use of general taxation as a means of funding road construction and maintenance), but frequently views transit as an auxiliary service that ought to be self-funding. Of course, the roads are not a complete free ride for users, who still have to pay for things like the vehicle itself and for fuel, but the mentality is still there.

Some of the libertarian congestion pricing “group think” is pure ideological twaddle,it is not a cure all for congestion, it is not a good urban system management tool, and is extremely regressive in urban schemes, but tolling should not be taken off of the table. Tolling is a viable and fair method to pay for much intercity improvement and for inducing private investment into the market for critical infrastructure development.

Public giveaways like the scandalous Indiana Toll Road deal are a public disgrace, but that is a result of poor policy and political game playing. These poor applications of the concept are not an indictment of the concept of road pricing or contracting for operation of roads. Proper policies, including first and foremost above board transparent contracting and franchising, can use road pricing to rebuild our crumbling interstate system, and fairly charge the users. Just becaus people have behaved in a shoddy manner, doesn’t make the concept wrong.

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